City Just Found out that I have a rental suite... What do I do?

Hey Guys,
I have just bought a rental property in New Brunswick where previously the city had been in the dark about the rental suite in the basement of the house (Which means I have currently a suite which is not fully legal)

However I have just had an electrician try to replace the downstairs electrical panel and when he tried to pull the building permit at city hall he unknowingly mentioned to them that there are 2 units in the house. Now they are reviewing their records and I'm afraid they might send and inspector and screw me over in demanding many upgrades and an increase in taxes.

Does anybody know how I can get around this? Currently I have tenants downstairs and nobody upstairs and it is likely apparent that I have 2 units for sure even though there is a staircase connecting the 2 units. Do I have an inspector coming to check it out for sure now?

Am I screwed here and forced into major renovations in order to get by?
Any suggestions?

Yes you may be asked to remove the second suite.

Or you can do it yourself by removing the stove downstairs and move tenant upstairs. Thus, an empty basement.

Or you do nothing and hope for the best.

Okay So aparently the electrician who got me into this pickle has mentioned that the guy at city hall might be considering a zoning change... what might this mean for me if I keep the suite in?

This all becomes very complicated as I have a lease with the tenants downstairs until November, so i have no idea what would happen there.

Be clear on one thing, it's not the electrician that got you into the pickle.

If they're considering changing zoning to allow the suite encourage them to follow that process. You may dodge a large money bullet but don't count on it. Yet.

It may take some time until the city will contact you ,you could find a tenant from November that will rent the whole house with two suites under one contract .I think that is important to be patience and look at all your options .good luck with that , it's stressful but it may not be so bad at the end

Legal basement suits can significantly increase the value of the property. It could turn out to be a blessing in disguise.

Follow the rules. Municipalities have the direct right to shut down non-conforming developments. If you are flagged and warned they can stick on hefty daily fines. There is no getting around the rules.

Most tenants will not fight you if they are forced to move for zoning reasons.

You could continue to run the suite and hope the city does not flag you. The money you invest into the suite may be lost as there is no zoning. This research into suites should have been made as part of the due diligence research.

and/or...

Rent the house out as a single unit and begin lobbying for basement suites. Don't invest any more money into developing the basement suite. Look through the city's upcoming council minutes and past minutes to see if there is any mention of legalizing basement suites. Talk to the city planning /current development office. See if they have any reports going to council. Call up your ward's city counselor and see if there is any real city appetite. You will probably not get any support from community leagues and legalizing basement suites tends not to be very politically popular so there needs to be a strong affordability reason for legalizing and policing the suites.

But most likely... if you flagged yourself, they are watching you. Legalizing basement suites is a very lengthy process. If rezoning isn't already in process it can take literally years to establish the bylaws (see Calgary's recent battle). You are likely saddled with a whole house to rent in the meantime.

Go legit! God forbid the house catches on fire in the basement. Insurance will screw you.